Previous analysis of molecular chimeras between the mouse mammary tumor virus (MMTV) long terminal repeat (LTR) and the v-ras transformation gene from Harvey murine sarcoma virus (HaMuSV), and between the LTR and the chloramphenicol acetyl transferase (CAT) gene localized the steroid hormone regulatory sequences between 100 and 200 nucleotides upstream from the cap site in the LTR. Utilization of a competition assay with specific MMTV-LTR fragments and total cellular DNA immobilized on cellulose has shown the preferential binding of the glucocorticoid receptor to fragments of LTR DNA containing the sequences identified in gene transfer experiments as important for hormone regulation. The addition of transcriptional activator sequences to the MMTV promoter indicates that the hormone regulatory sequence is capable of regulating the activity of the exogenous enhancer. These observations suggest a model for the mechanism of hormone action in which the regulatory sequence acts as a modulator of another cis-dominant positive element.